Gold Seesaws Lower As Fed Bigwigs Meet

By Brendan Conway

After a winning start to the week, gold traders are on the defensive Tuesday as a two-day Federal Reserve policy meeting gets underway.

The most heavily traded futures contract is down by 1.1% to $1,231, reversing all of the previous session’s gains. Is it the same old Fed “taper” torpor?

“Rush to sell gold from portfolios prior to the Fed meeting worried about tapering lowered prices to support levels,” writes RBC Capital Markets precious-metals strategist George Gero in the characteristic shorthand of his morning client email.

Over at Commerzbank, the subject this morning was the metal’s ability to gain on Monday even in the face of heavy outflows from exchange-traded funds:

What is remarkable is that the gold price managed to recover yesterday despite high ETF outflows – gold ETFs tracked by Bloomberg saw outflows of 10.8 tons as the week got underway. 80% of the outflows were attributable to the SPDR Gold Trust, the world’s largest gold ETF.

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Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.